Domino v Allen

1. The application to set aside bankruptcy notice BN284404 be dismissed.
2. The time for compliance with bankruptcy notice BN284404 not be extended beyond 19
3. March 2026.
4. The applicant pay the respondents' costs of the proceeding to be taxed in default of agreement.

Note: The form of the order is subject to the entry in the Court's records.

Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 24.04(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2025 (Cth), or to record a variation to the order pursuant to r 24.04 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2025 (Cth).

1. There is, before the Court, an application to set aside a bankruptcy notice. The bankruptcy notice arises from a costs judgment of the Supreme Court of Victoria. The underlying proceeding was an application for an injunction by the debtor against various parties, including the creditor, and that application was refused. The judge then made costs orders in the sum of about $17,480 against the debtor and in favour of the creditors. The creditors are the liquidators of Torbeckin Pty Ltd (In liq). The debtor was a director and the shareholder of Torbeckin.
2. When the matter came on for hearing today, the applicant debtor slightly amended the orders that she is seeking. She wants her application to set aside the bankruptcy notice to be adjourned to a date to be fixed. She wants compliance with the bankruptcy notice to be extended until further order. She wants there to be an order that she notify the Court within two days of the resolution of her stay application in the Supreme Court, that there be liberty to apply on 24 hours notice and that costs be reserved.
3. The situation is that the costs order in the Supreme Court was made on 19 December 2025. The bankruptcy notice was served on 8 January 2026 and the applicant filed an application for leave to appeal to the Court of Appeal on 16 January 2026. The applicant also filed in the Court of Appeal, on 16 January 2026, a written case supporting her application. Yesterday, she filed an application for a stay of the Supreme Court costs order made on 19 December 2025 which is the order that underpins the bankruptcy notice.
4. Obviously, the Supreme Court has not yet considered the stay application, as it was only filed yesterday. To get a stay, the applicant would need to convince the Court that she has a reasonable prospect of success. Similarly, to get leave to appeal the interlocutory costs order that underpins the bankruptcy notice, she would also need to satisfy the Court that she has got at least a reasonably arguable case.
5. The applicant has raised a number of points. The first is that she says that there would be a double recovery of costs if the costs order made by the Supreme Court of Victoria were allowed to stand or be enforced. That is because, she says, the costs that the liquidators claimed in the Supreme Court proceeding were actually costs that it had already recovered because were funded by debits to the mortgage or loan account of Torbeckin.
6. The applicant's argument about a double recovery was put to Attiwill J in the Supreme Court prior to his Honour making the costs order that underlies the bankruptcy notice. His Honour rejected that claim, based on the affidavit of a Ms Toholka, who I understand was a solicitor acting for the mortgagee of Torbeckin.
7. Ms Toholka said, in her affidavit, that the debits to the loan account that were marked legal services and which the applicant says were for the legal costs of the liquidators were actually for legal services provided to the mortgagee and not to the liquidator. Attiwill J accepted that evidence from Ms Toholka, based on the material before his Honour. That conclusion also accords with common sense. It would be very unusual if the liquidators of Torbeckin were adding their legal costs to the debt owed by a company of which they were liquidators to a third party. It is unlikely that the third party would permit their debt to be increased in that way.
8. In any event, Attiwill J in the Supreme Court also said that if the liquidators had added their legal costs to Torbeckin's mortgage, they would have to repay any such amount that they recovered to the mortgagee, so there would not ultimately be any double recovery. It seems to me, with respect, that Attiwill J was correct in his analysis.
9. Since the Supreme Court costs order was made, there has been additional material filed in this court by the liquidators, in which they have sworn that they have not recovered any funds or legal costs from the Torbeckin mortgage or anywhere else. Obviously, as officers of the court, they would be risking their professional standing if they were found to have lied about that.
10. It seems to me that there is very little prospect of the argument about double counting succeeding.
11. In her most recent affidavit, filed yesterday, the applicant said that there is an approximate correlation between amounts charged by the liquidators and the amounts debited to the mortgage. However, just because there is an approximate correlation does not mean that the liquidators actually charged the relevant amounts to the mortgage account. The amounts may approximately coincide simply because the lawyers acting for the mortgagee happened to undertake similar types and amounts of work to the amounts that the lawyers for the liquidators undertook, and hence, charged similar amounts. The mortgagee was also a respondent to the application in which the costs order of about $17,480 was made against the debtor. One way or another, the approximate correlation of amounts charged by the liquidators and the amounts appearing in the mortgage account is a very thin basis to say that Attiwill J made any error, or that there was, in fact, any double recovery.
12. The applicant, in her Supreme Court application for leave, also said that Attiwill J made an arithmetic error by taking 80 per cent of $20,600 as the appropriate amount of costs when there was no foundation for the figure of $20,600. However, that figure was before his Honour in the second affidavit filed by Mr Pomaroff, who was the solicitor for the liquidators. What the applicant has said about this arithmetic error is simply misplaced. Her submissions to the Supreme Court did not mention the second affidavit. There seems to be no basis for the contention that there was an arithmetic error in the decision of Attiwill J.
13. Costs orders, of course, are discretionary. It is not easy to get them set aside. The reasons that the applicant has put forward for setting aside the costs order in this case do not seem to me to have anything remotely resembling a reasonable prospect of success.
14. The applicant has also emphasised that what she is seeking at the moment is really an adjournment to allow the stay application to be decided. The fact is that the applicant could have applied for a stay back on 16 January 2026 when she applied for leave to appeal.
15. And if she had done so, there is a fair chance that the application for a stay would already have been determined. But by delaying the filing of her stay application until yesterday, when she is about to commit an act of bankruptcy, is possibly tactical. The applicant says that she was not in a position to have filed the stay application earlier because she has six other matters on foot. She says she has mental health issues. She implied that she is overwhelmed.
16. However, the fact that the debtor was able to file a very cogent application for leave to appeal and file cogent written submissions in support of that application, suggests that she would have been well able to file the stay application if she had been minded to do so. And as I say, if she had filed it on 16 January 2026, it is reasonable to suppose that it would have been dealt with in the Supreme Court by now. I dare say it would have been refused. That means that obviously, there would have been no stay and no reason to not proceed with the bankruptcy.
17. It is important to note that this is an application to set aside a bankruptcy notice. It has been stayed by a registrar until 19 March 2026.
18. We are not at the point where refusing to extend the time for the bankruptcy notice would result in the applicant's bankruptcy. This is not the creditor's petition stage. Things are not as dramatic as they would be at that point. As this is the bankruptcy notice stage, it is also the case that if the bankruptcy notice is not set aside, there is still time for the applicant's stay application to be heard and determined prior to the creditor's petition being heard and determined
19. It seems to me, in all the circumstances of this case, that it would be wrong to either set aside the bankruptcy notice or extend the time for compliance with it beyond 19 March 2026. As in all bankruptcy matters, there are interests of the public generally to consider and the interests of any other creditors. It is also important that the date of the act of bankruptcy be fixed and occur at the proper time. It is not in the interests of the public generally for matters in the bankruptcy sphere to be prolonged.
20. The applicant has made a vague suggestion about an abuse of process on the part of the liquidators. However, that has not been elaborated on in any reasonable way. It seems to me that there is no abuse of process on the part of the liquidators. They are creditors of the applicant. They are entitled to pursue the bankruptcy notice and deal with the overall debt owed to them in the most efficient manner that seems to them to be available. As liquidators, they have obligations to the creditors of Torbeckin and to the community generally. It is not appropriate for their proceedings to be held up with greater costs being incurred through a delayed legal process.

I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Riley.